Port Royal staff say FY2026 budget balances without raising millage despite $600,000 property-tax shortfall

Port Royal’s budget workshop on May 30 focused on staff’s plan to deliver a balanced fiscal year 2026 budget without increasing the town’s millage despite a substantial shortfall in property-tax revenue tied to recent exemptions.

The staff member presenting the budget said the administration aimed to avoid tapping the general fund balance and had identified a plan that combines transfers from an expired tax increment financing (TIF) district, increased compliance revenue and targeted fee changes to close the gap. “We are almost 600 thou — we’re more than $600,000 short of what we anticipated because of the property tax exemptions,” the staff member said.

Why it matters: Council members emphasized that raising taxes would shift costs to residents and praised staff for seeking alternatives. The chair said the council instructed staff not to rely on a millage increase and thanked staff for producing a balanced plan under difficult circumstances.

Key details: Staff presented a draft expenditure total (figures were read aloud with some inconsistencies during the presentation) and identified a pre-transfer deficit of $358,747. To reduce reliance on reserves, staff proposed using roughly 50% of proceeds returned from an expired TIF district to help balance FY2026. The presenter said most year-over-year increases are personnel-related — cost-of-living adjustments, retirement contributions and other staff-related costs — and pointed to an anticipated rise in liability-insurance coverage that was built into the budget.

Staff also described revenue offsets and potential new revenue sources. They said improved business-license compliance and stronger collection of hospitality and accommodation taxes (including short-term rental compliance) have produced additional revenue. The town is evaluating a fire service fee and said a police service fee could be considered if feasible; staff noted other municipalities affected by the exemption issue are exploring similar fees.

The presentation included fee-structure reviews: staff reported a reevaluation of the stormwater utility fee tied to capital needs in the town’s master plan and a reassessment of development/site-plan fees so permitting charges better reflect actual engineering and town costs. Staff also said Port Royal’s solar utility fee is less than half of the next municipality’s fee.

Reserves and fiscal safeguards: Staff reported about $7 million in reserve (“ready day”) funds, well above commonly cited reserve-ratio guidelines, and proposed modestly increasing a discretionary projects buffer from the $41,850 currently identified to $55,000 to provide flexibility for unexpected needs. The presenter said year-end disbursements from the municipal association’s insurance program may alter final tallies.

Process and next steps: Staff noted the FY2027 figures will reflect the county tax digest and any future legislative action on exemptions or grandfathering provisions. The presenter said the state fiscal authority indicated Port Royal could increase millage by 2.63% based on CPI and population calculations but said the town is not pursuing an increase now; the authority’s calculation also showed a 1.4% population reduction that affects local government fund distributions.

Council response and procedural outcome: Council members asked clarifying questions about boat-tax impacts and fee mechanics and expressed support for the staff’s approach. The workshop concluded with no formal votes or motions; the chair closed the meeting after council members indicated they had no further questions.

Quote highlights: The chair criticized the exemption outcome as unfair to residents, saying, “There’s no way to justify it,” and staff emphasized the shortfall’s scale: “We are almost 600 thou — we’re more than $600,000 short.”

What was not decided: No final ordinance, fee schedule, or policy change was adopted at the workshop. Staff will return with final numbers and any formal proposals for fees or ordinance changes if further action is recommended according to the town’s process.